Always being out of stock is an indication that materials planning is not being done appropriately. Material planning basically boils down to forecasting sales of finished goods, producing finished goods to meet customer demand, and purchasing raw materials so that the arrive before they are needed in production.
The first step is to have an accurate materials inventory. This typically requires conducting a complete physical inventory and periodic cycle counts. Having an accurate record of inventory on hand is absolutely critical the success of materials planning.
Next, all transactions that increase or decrease inventory on hand must be recorded. As you might guess, physically taking items from stock without recording a corresponding transaction in the system will make the balance in the system higher than it actually is. This, in turn, will cause the system to not suggest a purchase when it should.
Finally, rules must be defined and applied to ensure that finished goods are manufactured before they need to be shipped to the customer. Similarly, rules must be defined and applied to ensure that raw materials are purchased before they are required for production. Materials Requirements Planning (MRP) functionality, generally found in ERP systems, can help to define and apply rules to ensure materials are manufactured and purchased on time to meet customer demand.
If you are frustrated by “out of stock” and backorder situations and would like a little help, please call us at (310) 539-4645 or visit https://ssgnet.com.